Rockets take charge in CSN Houston negotiations

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The Rockets moved Thursday into the role of lead negotiator on behalf of Comcast SportsNet Houston and said they hope to increase distribution for the network as soon as possible.

U.S. Bankruptcy Judge Marvin Isgur, who since Oct. 29 had placed the Astros in charge of developing a new business plan for CSN Houston, approved the change and set Jan. 7 to hear updates on the Rockets’ progress.

That timetable indicates that the network, which carries Rockets and Astros games, likely will enter the new year available to no more than 40 percent of Houston’s 2.2 million TV households. The Rockets, however, said in a statement they would continue working to attract new distributors, which could include DirecTV, AT&T U-verse, Suddenlink and others.

“The network situation is very sensitive and has been subject to extensive media scrutiny,” the Rockets said in a statement. “Any erroneous information or miscommunication can be very detrimental to the process, so we will be handling all internal and external discussions with our current partners, potential affiliates and potential investors in a private and confidential manner.

“We will carry the process ordered by the court and work diligently on behalf of the network to deliver the games and great network programming to the fans throughout the region as quickly as possible.”

Astros owner Jim Crane was placed in charge of negotiations in late October by Judge Isgur, who is overseeing an involuntary Chapter 11 bankruptcy case filed Sept. 27 against the network. That order expired Thursday, and the change in lead negotiator was announced during a hearing involving attorneys for the partners – the Astros, Rockets and Comcast/NBC Universal – in Houston Regional Sports Network, the parent company of CSN Houston.

“We have had some initial interest and some preliminary offers,” Crane said. “The Rockets have asked that they be more involved, and we are going to move forward with them.”

CSN Houston has struggled financially since its launch in the fall of 2012 because of the inability to arrange carriage agreements. The network was unable to pay the Astros’ rights fees for three months at the end of the 2012 season, and the team was prepared to retake its rights fees when the involuntary bankruptcy petition was filed by four Comcast affiliates.

The Astros have asked that the case be dismissed, and Comcast and the Rockets have asked that the court appoint an interim trustee for the network. Isgur delayed ruling on the motions when he designated Crane as lead negotiator.

That role, however, was complicated last month when the Astros filed a lawsuit against Comcast, NBC Universal and former Astros owner Drayton McLane, accusing them of engaging in fraud in their discussions with Crane while he was negotiating to buy the Astros in 2011.

Giles Kibbe, the Astros’ general counsel, indicated in a statement that Comcast’s discomfort over the lawsuit played a role in the decision to cede the lead negotiating role to the Rockets.

“We have been engaged in negotiations with two major players and holding weekly meetings with the Rockets and Comcast to keep them apprised of the discussions,” KIbbe said. “Comcast recently expressed concern with the Astros negotiating for the network while our civil suit is ongoing. Given the status of the negotiations with the two major players, we would like for the Rockets to continue these discussions.

“We do not want there to be any question as to whether our lawsuit against Comcast has any bearing on the results of the negotiations with the other carriers. We are confident in what we have done to this point and we have handled this exactly as Judge Isgur has requested and in the best interest of the network.”

Kibbe added, “Our interests are aligned with the Rockets in that we both want our fans to view our games. As we have done throughout this entire process, we will both continue to work tirelessly toward getting the games on TV for all of our fans.”

The statement did not identify the “major players” with whom the Astros had talked. DirecTV and AT&T U-verse have recently declined comment on the question regarding CSN Houston.

It also was disclosed Thursday that the Rockets, who own about 31 percent of the network, have made a bid to buy an undisclosed additional share of the network. The Astros own 46.3 percent of the partnership, and Comcast/NBC Universal owns about 22.6 percent.

Details of that offer have not been filed with the court.

Rockets attorney Alan Gover said Jan. 7 “would be the intended end date for the continued court-provided investigation of restructuring opportunities.”

Attorney Paul Basta, who represents Crane in the bankruptcy case, told Isgur that “a few discussions have started. We don’t know whether they’re going to go somewhere … (but) are supportive of the Rockets continuing the work that Mr. Crane started. We hope that what can come back is the description for a profitable enterprise.”

The January status conference also will be the next time that attorneys gather to discuss the Astros’ case against Comcast, NBC Universal and McLane, which was filed in state court but moved to federal court at Comcast’s request.